Market Outlook January,

Transcription

1 Market Outlook 2004 January,

2 Forward Looking Statements This document contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management s current views with respect to certain future events and performance, including statements regarding tanker charter rates, and the balance of supply and demand in the crude tanker market. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in production of or demand for oil and petroleum products, either generally or in particular regions; greater or less than anticipated levels of tanker newbuilding orders or greater or less than anticipated rates of tanker scrapping; changes in trading patterns significantly impacting overall tanker tonnage requirements; changes in the typical seasonal variations in tanker charter rates; changes in the offshore production of oil, and the possibility that past performance is not reflective of future performance. Teekay Shipping Corporation 2

3 Market Update 2003 a story of two halves Outlook for 2004 Very Strong Demand January TCE Averages (Clarkson) VLCC $92,000 per day Suezmax $106,000 per day Aframax $63,000 per day Teekay Shipping Corporation 3

4 Quarterly Average TCEs VLCC Suezmax Aframax 90,000 80,000 70,000 US$ per Day 60,000 50,000 40,000 30,000 20,000 10, q90 1q91 1q92 1q93 1q94 1q95 1q96 1q97 1q98 Source: CRS 1q99 1q00 1q01 1q02 1q03 4q03 Teekay Shipping Corporation 4

5 2003 A Story of Two Halves! Tanker demand growth (4.3%) outweighs supply growth (3%) 1 st Half Short Termers Prestige Severe winter Disruption in Venezuela & Nigeria Iraq War Japan Nuclear Outage 2 nd Half Fundamentals Economic growth led oil demand growth oil demand grew by 1.9% in 2003 China, US, India Increasing long-haul trades Dry bulk boom draws OBOs Short termers: Iraq, Bosphorus Teekay Shipping Corporation 5

6 Tanker Demand 2004 Oil Demand Strong global economic growth over 4% - led by China & US High oil prices (Brent - $25-27 / barrel) Global Oil Demand : +1.6%* in 2004 (potential for over 2.0%) Strong growth in China under estimated by IEA Japanese nuclear plants returning but not 100% as yet (6 of 17) India and rest of Asia Potential for upside Low oil stocks (especially US) More Atlantic crude moves East Seasonal factors e.g. Bosphorus congestion High refinery margins High natural gas prices switching to oil Growth in refining capacity (China + India) * Source: IEA Teekay Shipping Corporation 6

7 World GDP Growth Percentage Source: IMF Teekay Shipping Corporation 7

8 Year on Year Change in World Oil Demand and Production Oil Demand Oil Supply Percentage 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Source: IEA, Analyst Average Teekay Shipping Corporation 8

9 Annual Growth in Chinese Oil Demand 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Fcst Source : IEA Teekay Shipping Corporation 9

10 China Net Crude and Product Imports Crude Products 2.0 Million Barrels per day YTD Source : Chinese Customs Nov.03 Teekay Shipping Corporation 10

11 Tanker Demand 2004 Oil Supply Non-OPEC growth estimated at +1.5 mb/d in 2004 (0.9 mb/d in 2003 v IEA forecast of 1.4 mb/d). Increase from FSU, W.Africa, Lat Am & North Am. OPEC keeps high price policy = loss of market share Call on OPEC + stock change = 25.5 mb/d (-0.4 mb/d) on 2003 OPEC NGLs/other oils up 0.4 mb/d to 4.1 mb/d Other Factors Referendum in Venezuela another disruption? Venezuelan production at 2.9 mb/d versus 3.4 mb/d pre-strike CHINA slowdown in economy Iraq Exports being routed from AG over 100 sabotage incidents on pipeline to Ceyhan Production can rise to 2.8 mb/d by end-2004 but export capacity and under investment will limit rise from current levels of 2.0 mb/d Teekay Shipping Corporation 11

12 Tanker Supply Teekay Shipping Corporation 12

13 Tanker Supply Fleet growth restrained in 2003 up 2.9% OBOs switched to dry cargo trades in 2003 due strong market effective decrease of 1% of total fleet OBOs still switching to dry expect another 1% move in 2004 IMO regulations come into force April 5, million dwt in mandatory scrapping by end-2005 Effect of heavy oil on double hulls only has not been quantified Our base case assumes that 45 million tonnes will be scrapped by end-2005 Scrapping ahead of mandatory schedule Teekay Shipping Corporation 13

14 Yards full for 2006 Tanker Supply 2007 capacity restricted as yards focus on other ship types Strong demand from LNG sector that will occupy tanker berths (Aframax or VLCC) Teekay Shipping Corporation 14

15 Tanker Supply - Outlook Deliveries Deletions On Order Net Change Million Deadweight Source: Clarkson Teekay Shipping Corporation 15

16 Conclusion Strong tanker market fundamentals for 2004 Demand Several strong positives on demand side of equation Other short term factors could provide further upside Supply Fleet growth restricted by regulations & charterer discrimination Scrapping ahead of mandatory phase out due to commercial obsolescence Other Factors Geo-political events Iraq / Venezuela / Terrorist / SARS Slower than expected economic growth especially CHINA Another Prestige incident Teekay Shipping Corporation 16

17 Average Aframax Earnings Nominal Linear (Nominal) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, US$ per day Source: SSY/Clarkson Teekay Shipping Corporation 17